Dumb and dumber as US trade dinosaurs smell blood
MICHAEL Wolff’s insider exposé of Donald Trump’s White House had a revealing nugget on what the head of the President’s National Economic Council, Gary Cohn, thought of the man himself: in Cohn’s view, the Commander in Chief was “dumb as sh*t”.
Now Cohn, the former Goldman Sachs finance chief and widely regarded as one of the few grownups of the Trump administration, has gone, and no wonder: for a traditional free trader, Trump’s import tariffs on steel and aluminium were clearly the final straw.
After a career spent at a company at the zenith of free-market capitalism, he couldn’t stand by and condone a lurch towards protectionism.
Stretching back to Roosevelt, the revolving door between the bank and the White House has been uncomfortable to watch: the vampire squid bank has stuck its blood funnel into the highest political echelons, providing an array of senior staff.
But I’d rather have Cohn on board at the White House than not. His departure drastically weakens the credibility of the Trump team, and financial markets obviously agree, judging by the dollar’s weakness today and equity market jitters.
What comes next, however, is the real worry. The potential embodiment of those fears is Peter Navarro, a free-trade sceptic determined to build protectionist walls, whose stance has been attacked by economists on Right and Left.
This key architect of Trump’s thinking on trade, indeed the chair of his National Trade Council, wrote a book in 2011 called Death by China, accusing it of employing “weapons of job destruction” and even saying the US had to be ready for armed conflict at any moment with the new Red Peril.
Navarro has been kept in his box over the past year, to the extent that Cohn reportedly demanded that he be copied in on every email that Navarro sent at the White House.
But without the counterweight of the ex-Goldman Sachs man, the chances are that the 68-year-old will wield untrammelled influence in Pennsylvania Avenue.
His apparent triumph is also a blow for the Cabinet’s Brexiteers like Liam Fox, who’s betting the farm on the UK striking free-trade deals around the world. Indeed, this White House departure matters for all of us as the US is the biggest single destination for our exports.
This isn’t a full-blown trade war yet, but the skirmishes are mounting as China and the EU threaten retaliatory measures. It’s a step on the road towards SmootHawley, Herbert Hoover’s disastrous imposition of tariffs in the 1930s, which prolonged the Great Depression and two words likely to bring any sensible economist out in a cold sweat.
Trump’s pandering to the US steelworkers in his political base isn’t on that scale (yet) but will inevitably make us poorer, as they dampen economic activity and push up inflation.
Cohn’s pithy three-word summary of the President’s capacities looks right on the money.
@russ_lynch